In a historic move, Africa’s richest man, Aliko Dangote, has launched a $20 billion oil refinery, marking a significant milestone in the revival of Nigeria’s oil industry. The Dangote oil refinery, located in the Lekki free trade zone area of Lagos, Nigeria’s commercial hub, is considered a ‘game-changer’ in ending the country’s fuel imports.
Despite being one of Africa’s largest oil producers, Nigeria has long grappled with the paradox of its oil industry. The nation produces an estimated 2.2 million barrels of crude oil per day, yet lacks the capacity to refine its oil. This has led to a heavy reliance on imported petroleum products from countries like India, Belgium, UAE, and the Netherlands. Between 2015 and 2019, the cost of importing refined petroleum products exceeded the exports by $58.5 billion, according to OPEC.
The Dangote refinery aims to address these challenges head-on. With a capacity to process 650,000 barrels per day, the refinery is set to double the country’s refining capacity. It aims to produce up to 53 million liters of gasoline per day, as well as 4 million liters of diesel and 2 million liters of aviation jet fuel daily. This is expected to significantly reduce the amount of money the country spends on importing refined crude products.
“There will be constant availability of high-quality fuels for our transportation sector, the refinery will also make available to our industries vital raw materials for a wide range of manufacturing,” said Dangote at the launch of the refinery. He added that the refinery, which he described as “the world’s largest single train refinery,” is designed with state-of-the-art technology and a scale in capacity that will be a game-changer in Africa and the global market.
The refinery’s launch was attended by outgoing President Muhammadu Buhari and some West African heads of state. The refinery is expected to increase demand for fuel domestically, generate foreign exchange for the country through exports, and create jobs.
The Dangote refinery was partly financed by Dangote’s equity investment, with the remaining financing coming from debt finance from banks such as Access and Zenith banks. The refinery sits inside the Lekki Free Zone, a 16,500-hectare free trade area, the masterplan for which also contains a proposed airport, a start-up community, and commercial and residential areas.
Head of Nigeria’s Central Bank, Godwin Emefiele, said the refinery “is more than able to meet all of Nigeria’s domestic fuel consumption, given its processing capacity.” He further explained that: “Nigeria can be self-sufficient in all products that we consume and at the same time export our excess output to the rest of the world”.
In conclusion, the launch of the Dangote refinery marks a significant turning point in Nigeria’s oil industry. By addressing the country’s refining capacity deficit, the refinery is set to transform Nigeria from a net importer of petroleum products to a net exporter, thereby boosting the country’s economy and reducing its dependence on foreign imports. This is indeed a game-changer for Nigeria and Africa at large.
